An advisory opinion has been requested concerning whether a person who serves as the Deputy Director of Administrative Services for the Department of Licensing and Regulation (DLR) may apply for and be licensed by the Home Improvement Commission, a regulatory agency within DLR. The Requestor is advised that this business and licensing activity would not be barred by the Public Ethics Law, as long as the activity does not develop to include significant enforcement or other dealings with the agency licensing unit.
The Requestor, who is in a Grade 13 administrative position, is responsible for coordination and supervision of administrative services to all units in the Department. The position involves directing and monitoring the work of the agency printshop, the mailroom operations, the public information center, central supply and purchasing, and the records management office. The Requestor is also responsible, agency-wide, for forms control management, telephone service, management of the agency vehicle fleet, and inventory control. He is the agency liaison with the owner of the building in which the agency is located, and is involved in floor plans, rehabilitation and other aspects of space management. As to the Commissioner of Occupational and Professional Licensing, for example, he coordinates with licensing agencies on the mailing of license renewals, dealing with questions such as deadlines, procedures, materials needed and the best possible method of mailing.
One of the units in DLR and within the jurisdiction of the Commissioner of Occupational and Professional Licensing is the Home Improvement Commission. This Commission is established by Article 56, §245269A, Annotated Code of Maryland, and is generally charged with responsibility for licensing and regulating contractors and salesmen in the home improvement industry. Home improvement includes the repair, replacement, remodeling, alteration or addition to any land or building to be used as a residence or dwelling place. This includes construction and improvements as to structures that are adjacent to a dwelling house, such as a driveway, swimming pool or porch. The statute prohibits a person from engaging in or transacting any home improvement business except in compliance with the licensing and other provisions of the law.
The Home Improvement Commission may issue, suspend, deny or revoke a license in accordance with the statute. Licensing includes the taking of an examination prescribed by the Commission on the law relating to the practice of home improvement contracting and the applicant's business management capabilities. A license may be suspended, denied or revoked for a variety of reasons, including among others, that the individual has consistently failed to perform contracts or has manipulated assets or accounts, has engaged in a practice of fraud or bad faith, has violated any provision of the law or is performing or attempting to perform any act prohibited by the law, has failed to evidence financial solvency, or has been shown to lack competence to engage in home improvement contracting by a practice of failure to perform contracts. The statute also defines a variety of prohibited acts.
The Commission, which, in addition to its licensing function, investigates, hears and adjudicates complaints filed by homeowners, consists of seven members appointed by the Governor with the advice of the Secretary of Licensing and Regulation. Its Executive Director is appointed by the Secretary, and its staff are hired by the Executive Director and are employees of the Department within the Office of the Commissioner of Occupational and Professional Licensing. The Commission may issue injunctions, order restitution or completion of a contract, and impose a civil penalty not to exceed $2,000 per violation. It also administers the Home Improvement Guaranty Fund.
The Requestor wants to establish a private business to do interior and exterior painting. He would not affiliate with another contractor, but would be a sole proprietorship business. He would expect to employ only another family member who is a retired painter. He would plan to market within his local area of Harford County and would get business by advertising in the local paper and would also advertise on the side of his truck. He hopes to take the exam and apply for a home improvement contractor's license this summer.
The question presented here is the applicability to this situation of the outside employment prohibition of §3-103(a) of the Public Ethics Law (Article 40A, §3-103(a), Annotated Code of Maryland, the Ethics Law). This section bars an employee from being employed by or having an interest in an entity that contracts with or is under the authority of his agency (subsection (a)(1)(i)), or from having any other employment that would impair his impartiality or independence of judgment (subsection (a)(1)(ii)). The Requestor's private painting contractor business is one with which he would have both an employment and interest relationship for purposes of the Ethics Law. The business will require a home improvement contractor's license and will be significantly subject to the authority of his agency. The activity would therefore be prohibited by the Ethics Law unless an exception can be allowed pursuant to the provision in §3-103(a) that the prohibition applies unless the activity would not present a conflict of interest or appearance of conflict.
The exception provision was added to the Ethics Law in 1981 partly based on the recommendation of the Ethics Commission that flexibility be added to the absolute prohibitions in §3-103(a), where there is no conflict or appearance of conflict between the private interest or employment and the employee's agency or duties. In developing the exception criteria required in implementing this provision (COMAR 19A.02.01employment and 19A.02.02financial interests), we sought to define the circumstances where, despite the fact that an activity would technically fit within the prohibition, the relationship between an employee's official duties or his agency and the private employment or interest is so remote that the possibility of a conflict of interest or the appearance of conflict is unlikely.
The regulatory guidelines, as to both the outside employment and interest prohibitions, are thus directed to identification of the types of relationships that might exist between an employee's State duties and his private business to determine whether they are sufficiently remote that the statutory criteria are met. They include consideration of the impact a person may have in his State duties on the private business, and whether he is supervised by a person or works in the unit of his agency that contracts with or regulates his private business. The criteria also address issues that could arise as a result of the nature of the person's private activities, considering whether the individual would be responsible for negotiating or implementing any contracts with his agency, or would be responsible for ensuring compliance with agency regulations.
The Requestor in the situation presented here would be the individual responsible for complying with the requirements of the Home Improvement Law. In addition to the initial licensing and renewal process, he would be directly impacted by and interacting with the Home Improvement Commission and its staff if a consumer were to file a complaint against him. Moreover, his official duties at DLR could be expected to bring him into some regular contact with agency staff that work for the Commission. Under these circumstances, our initial reaction would be that the application of the criteria would bar an exception.
The regulations, however, further provide that exception may be allowed despite the existence of issues under some criteria, where the agency advises that allowing the activity would not impair the credibility of the agency in conducting its program, or otherwise present a conflict of interest or appearance thereof. In response to our request for agency input, the Requestor's supervisor and the official agency ethics contact both advise that he has no substantive responsibilities or relationship to the accomplishment by the Commission of its programmatic mission. His position is described as a relatively low-graded position involving administrative and ministerial work. Nor, apparently, would the administrative work he does for the agency impact on or otherwise be affected by his proposed private business.
Moreover, we are advised that the Home Improvement Commission has approximately 16,000 licensees, and receives about 3500 complaints, 3100 of which are settled without hearing. The Requestor's proposed business would be a small one, restricted in scope to residential painting, and it is therefore not anticipated that he would have the kinds of regular dealings and confrontations that would bring him into a position of visibility where his affiliation with the DLR would make a difference. It is the agency's view that despite his private responsibility for complying with the requirements of the Home Improvement Law, this limited likelihood of direct interaction with the Home Improvement Commission minimizes significantly the potential for its impacting on the Requestor's work or the agency's home improvement licensing program. The agency therefore does not believe that allowing the Requestor to pursue this endeavor would impair the credibility of its program or otherwise present a conflict of interest or appearance of conflict.
Based on all of these circumstances, we advise that an exception can be applied to permit the Requestor to establish this business and be licensed by his agency.1 We caution, however, that this conclusion relies to a significant extent on the agency's characterization of the Requestor's duties and official relationships with the Home Improvement Commission. It also reflects the view expressed by the agency that, given the size and scope of the Requestor's proposed business, it is unlikely that he will have dealings with the agency that will impact on the credibility of the agency program. Should the situation as it develops not be consistent with these understandings, then the continued applicability of the exception will need to be reevaluated.2
M. Peter Moser, Chairman
William J. Evans
Rev. C. Anthony Muse
Barbara M. Steckel
Date: June 28, 1988
1 We also conclude, based on these same circumstances and advice, that the activity would not be barred by the impairment provisions of subsection (a)(1)(ii).
2 The Requestor should also be aware that application of the exception is contingent upon his completion and submission of a Financial Interest Exception Disclosure Form.